Leather goods, including handbags, were a drag on the business. But branded watches and jewelry including names such as Michael Kors, Armani and Michele boosted its wholesale business during the holiday quarter.

Fossil will be launching Tory Burch watches in the second half of this year. To begin with, Tory Burch watches will only be sold in select stores, largely the designers own stores, Fossil CEO Kosta Kartsotis said in a conference call with analysts.

Fossil’s wholesale business in the U.S., which is mostly to department stores, increased 13 percent.

Total fourth quarter sales increase to $1.06 billion from $947.7 million last year.

Fossil reported net income of $148.5 million, or $2.68 a share, in the quarter ended Dec. 28, compared with net income of $151.1 million or, $2.51 a share, a year ago. The increase in earnings per share is a result of Fossil’s aggressive stock buyback program. Fossil has bought back about 20 percent of its stock in the past three years.

Analysts surveyed by Thomson Reuters had forecast a profit of $2.43 a share on revenue of $1.02 billion.

Sales were slow in its own U.S. Fossil stores, but were offset by store sales in Europe and Asia. Fossil ended the year with 543 stores, adding 18 in the fourth quarter.

“Leather didn’t meet our expectations. Handbags is a very competitive category right now,” Kartsotis said. Fossil is working on strengthening the category with new designs.

Fossil reported results after the market closed. Fossil’s stock price gained $1.96 a share, or 1.7 percent, to close Tuesday at $116.96 a share.

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